Correlation Between AMERICAN and PGE Corp
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By analyzing existing cross correlation between AMERICAN GEN P and PGE Corp, you can compare the effects of market volatilities on AMERICAN and PGE Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in AMERICAN with a short position of PGE Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMERICAN and PGE Corp.
Diversification Opportunities for AMERICAN and PGE Corp
Weak diversification
The 3 months correlation between AMERICAN and PGE is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding AMERICAN GEN P and PGE Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGE Corp and AMERICAN is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on AMERICAN GEN P are associated (or correlated) with PGE Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGE Corp has no effect on the direction of AMERICAN i.e., AMERICAN and PGE Corp go up and down completely randomly.
Pair Corralation between AMERICAN and PGE Corp
Assuming the 90 days trading horizon AMERICAN is expected to generate 1.93 times less return on investment than PGE Corp. But when comparing it to its historical volatility, AMERICAN GEN P is 1.31 times less risky than PGE Corp. It trades about 0.16 of its potential returns per unit of risk. PGE Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,051 in PGE Corp on August 29, 2024 and sell it today you would earn a total of 100.00 from holding PGE Corp or generate 4.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 72.73% |
| Values | Daily Returns |
AMERICAN GEN P vs. PGE Corp
Performance |
| Timeline |
| AMERICAN GEN P |
| PGE Corp |
AMERICAN and PGE Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMERICAN and PGE Corp
The main advantage of trading using opposite AMERICAN and PGE Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMERICAN position performs unexpectedly, PGE Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in PGE Corp will offset losses from the drop in PGE Corp's long position.| AMERICAN vs. AEP TEX INC | AMERICAN vs. US BANK NATIONAL | AMERICAN vs. Eat Beyond Global | AMERICAN vs. Charles Schwab Corp |
| PGE Corp vs. Consolidated Edison | PGE Corp vs. Southern Company | PGE Corp vs. Entergy | PGE Corp vs. Pinnacle West Capital |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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